NY AG Schneiderman Sues Big Banks On MERS

Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as "MERS certifying officers," have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

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[. . .] “The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

MERS was illegal from the day it was set up as it is a conspiracy to violate state title recording laws. The Feds will have to do one of those retroactive immunity thingies to get the banks off the hook. The complaint (PDF).

this smells like one of those deals where the SEC sues someone for securities law violations today and they settle the case tomorrow, having negotiated the resolution before the suit was ever filed.

Schneiderman's suit would provide the framework for getting a court stamp of approval (with the exception of Judge Rakoff, they don't pass on the merits or wisdom of settlements, no matter how bad) on the national absolution Obama's been pushing for his bankster buddies.

As a programmer, I HATE hackers!! However, a hack and alteration of the MERS system would bring down the house of cards faster than any court actions. Almost frightening to think of how it would play out.

From the link (my emphasis):

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

Can't even begin to envision what a goat rope that would be to put the genie back in the bottle.

I didn't get that one either. Recording acts are a carrot and stick approach. You are not required in most, if not all states, but you may not invoke the protections of the recording act, if you don't record, which leaves you vulnerable.

A more interesting question to me is the bififurcation of the note and mortgage. The black letter law is the mortgage follows the note. MERS never holds the note by its own admission. This has intersting implications. Then there are basic agency questions regarding MERS as nominee.